Apollo Global Management has agreed to acquire London-listed airline easyJet in a transaction valuing the low-cost carrier at approximately £5.7bn ($7.7bn), bringing an end to a months-long takeover contest after rival bidder Castlelake withdrew from the process, according to a report by Reuters.
The deal represents another major take-private of a UK-listed company by a US private equity investor, amid continued interest from financial sponsors in businesses trading at valuations below those of comparable US-listed companies.
easyJet’s board, advised by Evercore, unanimously recommended Apollo’s cash offer, describing the terms as fair and reasonable. The transaction has also received support from easyJet founder Stelios Haji-Ioannou and members of his family.
Apollo, which manages approximately $1.05tn in assets, said it intends to support easyJet’s growth strategy while privately owned, including accelerating the expansion of its holidays business.
The transaction follows an extended bidding process. Castlelake had made five proposals for easyJet before Apollo entered the contest in July, ultimately outbidding Castlelake’s £5.5bn proposal. Castlelake subsequently withdrew from the process without providing a reason.
The acquisition comes as European airlines contend with higher operating costs and uncertainty linked to the conflict involving Iran, with elevated jet fuel prices expected to put further pressure on margins across the sector.
One of the principal considerations for the transaction is easyJet’s ownership structure and its ability to retain flying rights within the European Union.
Because easyJet operates bases across the bloc, the airline must remain majority owned and controlled by EU interests to preserve its intra-EU operating rights.
Apollo has structured the transaction with this requirement in mind. Following completion, the Haji-Ioannou family and other continuing shareholders are expected to hold between 45.1% and 49.9% of the ordinary capital of the acquisition vehicle.
An EU management trust will hold up to a further 5%, while Apollo’s investment funds will hold the remaining interest, capped at 49.9%.
The UK’s Civil Aviation Authority has said it is engaging with the parties over the transaction.
easyJet shares have risen more than 65% since takeover interest first emerged but were still trading below Apollo’s offer price at 670 pence. The offer represents a premium of roughly 81% to the airline’s 394 pence closing price on 28 May, the final trading day before Castlelake’s interest became public.
The discount between the share price and Apollo’s offer reflects continuing uncertainty over the execution of the transaction, particularly around the ownership and control requirements, according to aviation analysts.
The transaction could also give easyJet greater flexibility as the airline industry faces higher fuel costs and potentially weaker margins.
Analysts said moving away from the public markets could reduce the company’s exposure to short-term earnings pressures and provide greater flexibility around investment and financing decisions.
Apollo’s ownership could also give easyJet access to additional capital and potentially more favourable aircraft leasing arrangements, while allowing the airline to pursue its commercial expansion strategy with a longer-term investment horizon.
The transaction is subject to the customary conditions and regulatory approvals before completion.
